3D Systems (DDD) has continued to make acquisitions. However, it is currently funding these acquisitions with cash on the balance sheet, rather than new equity issues. This eliminates a major component of the original long investment thesis.

I would ordinarily take such a signal as a positive sign that the company has escaped the reflexive boom and bust unscathed, and thus is poised for the “plateau of productivity”, as outlined in my article. However, the stock still trades for a P/E of 96 (using GAAP earnings). Even if we use the company provided non-GAAP growth rate of 43%, the company trades for a PEG ratio above 2.

This is still an overvalued company. And, as long as the company is not utilizing the high share price to fund growth, I can see no benefit to the overvaluation except an increase in risk of investment.

It’s cash levels will not sustain acquisitions indefinitely, so it might be supposed that 3D Systems will eventually switch to leverage-funded acquisitions, but without any proof that this is occurring, I believe it is too risky to take a long position in the company.